Making Government Work

From White House To Congress

Robert E. Hunter

• Publisher: Routledge
• Year: 2019
• eBook ISBN: 9780429718045
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: American Government
• Index: Politics & International Relations

Relations between Congress and the executive branch have always been an uneasy mixture of mutuality and autonomy, cooperation and conflict. The U.S. Constitution required that the two branches of the federal government work in concert, but it also mandated a separation of powers. Inevitably, this situation has led to a clash of wills and a contest

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The System CAN Work: The Trade Act of 1979

Richard R. Rivers

Richard R. Rivers is a partner in the law firm of Akin, Gump, Strauss, Hauer & Feld. Before entering private law practice, he served as general counsel of the Office of the Special Representative for Trade Negotiations in the Executive Office of the President, Rivers has also served as international trade counsel of the Committee on Finance of the United States Senate, participated in the preparation and enactment of the Trade Act of 1974, and subsequently served as a congressional staff adviser to the U.S. Delegation to the Multilateral Trade Negotiations in Geneva, Switzerland.

Executive-Legislative Partnership In International Commercial Policy

Within most democratic governments, the conduct of international commercial policy is the joint responsibility of the executive and legislative branches. This division of powers exists in varying degrees in most Western political systems. Nowhere, however, is this joint responsibility more evident than in the unique governmental system of the United States. This case study discusses the partnership between the president and Congress for the conduct of U.S. trade policy, how this partnership became strained during the 1960s, and how it was renegotiated with apparent success during the 1970s.

Under the U.S. Constitution, Congress is vested with the power to regulate foreign commerce. The president is the country's chief negotiator and representative in the international arena. Throughout U.S. history, Congress and the president have carried out these mutual and interacting roles diligently, if not always harmoniously.

This system has gradually given rise to open rivalry as the two branches have undertaken to carry out their constitutional roles and respond to their different constituencies in the conduct of foreign economic policy. Presidents, for example, have occasionally tried to exercise international trade powers properly reserved to Congress. And, on occasion, Congress has attempted to exercise the powers of the presidency.

At the same time, the nature of problems in international economic relations has become increasingly complex. The objective of trade liberalization has evolved from the reduction and elimination of tariffs to the negotiation of international rules on nontariff barriers.

The growth of economic interdependence during the postwar period has tested the existing political and legal mechanisms for governments in negotiating reciprocal reductions in the import duties they levy on imported goods at their borders. Yet, it is much more difficult for governments to negotiate international rules for nontariff barriers that indirectly affect trade and that may originate within state houses or even city halls.

For the United States, this trend toward economic interdependence and the proliferation of nontariff barriers has imposed a growing strain on the political and legal mechanisms for the conduct of international trade negotiations. These forces culminated in 1967 with the 90th Congress's express repudiation of an international code of conduct on antidumping that had been negotiated by executive branch officials during the Kennedy Round of trade negotiations. The antidumping code set the international rules by which governments must abide as they regulate imports sold in their national markets at prices below home market prices—a politically sensitive subject for Congress. In effect, Congress told both U.S. and foreign negotiators that, although they could negotiate and reach any international agreement they might wish, Congress could not be taken for granted, and the necessity for implementation in domestic law through legislation could not be circumvented.

This regrettable episode in executive-legislative relations created an atmosphere of suspicion and mistrust between the two branches and between the United States and its trading partners. Under such circumstances, the conduct of U.S. commercial policy became exceedingly difficult, if not altogether impossible. Foreign government officials, particularly those of The European Communities and Canada, came to doubt the credibility of U.S. negotiators and used that doubt as justification for not engaging the United States in negotiations on nontariff trade barriers.

In 1971, against this background of growing concern about the effects of nontariff barriers on trade and of mistrust between the executive and legislative branches, the Nixon administration began exploring ways to renegotiate the trade-policy partnership between the executive branch and Congress and to seek a renewed delegation of trade-negotiating authority from Congress. These efforts resulted in a negotiation between Congress and the executive and the enactment of the Trade Act of 1974, which created an unprecedented statutory framework within which the branches could perform their respective constitutional roles. This unique "experiment in constitutional government," as the Senate Finance Committee termed it, resulted seven years later in Congress's passing the most comprehensive trade legislation of the postwar era, if not indeed the country's history, by an overwhelming margin.

The chain of events, which began with congressional repudiation of an antidumping code in 1967, led to the renegotiation and innovative redesign of the executive-legislative partnership in 1974 and resulted in the passage of the Trade Agreements Act of 1979, is often suggested as a model of executive-congressional collaboration in the field of foreign affairs. Without prejudging the validity of such a model, this chapter describes the modern evolution of the trade-policy partnership between the executive and legislative branches and its operation, which, in effect, broke down and had to be renegotiated by the parties during the Tokyo Round of Multilateral Trade Negotiations (MTN) from 1973 to 1979.

The Constitutional Base

The U.S. Constitution established a federal government with three branches, a separation of powers, a system of checks and balances among those branches, and the president as the chief executive. Inherent in the presidency is the foreign affairs power by which the president has emerged as the chief negotiator and representative of the United States in the international arena. The primacy of the president in the field of foreign affairs, however, is not without qualification, as the Constitution itself imposes several limits on presidential powers, such as vesting the power to declare war in Congress and requiring that treaties be submitted to the Senate for its advice, consent, and concurrence. Yet over the years the executive branch has developed various forms of executive agreements, which—depending upon their nature and content—may or may not be submitted to Congress for approval and/or implementation.

In the field of international trade policy, the president's powers are strictly constrained by two powers the Constitution explicitly vests in Congress:

• the power to regulate commerce with foreign nations
• the power to lay and collect taxes, duties, imposts, and excises (Article I, Section 8)

As a practical matter, presidents may negotiate and enter into virtually any international agreement they desire. Such agreements may not be self-executing and may have domestic legal consequences, such as regulating foreign commerce by restricting imports at the border or raising revenues, which require congressional approval and implementation before having force and effect as domestic U.S. law.

The joint executive-legislative responsibility is a feature of most democratic systems, including parliamentary governments. The circumstance of a negotiator exceeding his or her legal authority and political capability is a potential problem for any government participating in international negotiation. These problems are manageable, however, for most parliamentary Western governments. In economic unions, such as The European Communities, they present difficult political, if not legal, problems. Because of the unique design of the U.S. constitutional system, these problems pose special challenges for the conduct of U.S. commercial relations—challenges that have not always been met or successfully overcome.

U.S. Commercial Policy

Prior to 1934, the tariff policy of the United States was set by Congress primarily to raise revenues and protect domestic production from import competition. Little, if any, attention was given to the consequences of U.S. tariff policy for the external relations of the United States or for the world economy.

In 1934, motivated by a desire to restore world trade and prompted by the exemplary leadership of then-Secretary of State Cordell Hull, President Franklin Delano Roosevelt requested and received from Congress advance authority to reduce tariffs in reciprocal negotiations with other countries from the levels designated in the Smoot-Hawley Tariff Act of 1930. This presidential action marked the beginning of the Reciprocal Trade Agreements Program and offers a modern example of executive-legislative cooperation in the field of U.S. commercial policy.

Following World War II, the United States took the lead in the design and construction of the postwar world economic order. At the 1944 international conference at Bretton Woods, and in later international conferences, the U.S. delegation proposed the creation of an international trade organization (ITO) and an international agreement for the regulation of trade among nations. Faced with growing opposition from a suspicious Congress, however, the executive branch abandoned its plans. The ITO never came into existence, and U.S. accession to the General Agreement on Tariffs and Trade (GATT) was accomplished by means of an executive agreement, which the Congress refused to recognize and never approved.

Despite this inauspicious beginning, the executive branch secured from Congress the authority to reduce U.S. tariffs in the context of reciprocal trade negotiations. Under the auspices of GATT, six rounds of tariff negotiations were held that steadily reduced tariffs, especially among the industrialized democracies.

As tariffs declined, the volume of world trade increased markedly in proportion to overall industrial production. As tariffs were lowered, however, more subtle and insidious barriers replaced them as the major obstacles to trade. Known as nontariff barriers, they came in such forms as subsidies, import licensing systems, customs valuation methods, discriminatory product standards, and government purchasing requirements. These governmental practices were deeply rooted in national laws and regulations and often served legitimate domestic interests, such as regulation of domestic industries, maintenance of domestic prices for international commodities, and the preservation of important industries for national security reasons.

Such governmental practices, however, seriously distorted world trade and created inefficiencies in the world economy. GATT, moreover, did not address many of these practices. Even those nontariff barrier practices that GATT restricted, such as export subsidies on nonprimary products, were addressed by rules that had proved vague, ineffective, and unenforceable over the years. In fact, many provisions of GATT had fallen into disuse and discredit, including procedures for settling disputes.

Although the reduction of tariffs was the principal object, during the Kennedy Round of trade negotiations, certain participating governments undertook to negotiate nontariff barrier agreements. In particular, the United States agreed to eliminate the highly protective American Selling Price system of customs valuation applied to imports of certain commodities and agreed to adhere to an international antidumping code regulating the responses of governments to imports sold below fair value. The decision by the executive branch to negotiate on nontariff barriers in the Kennedy Round was made in the face of express congressional opposition to negotiating such matters and was carried out under the general foreign affairs power of the presidency.

At the end of the Kennedy Round, Congress reneged on the executive branch commitments and declined to repeal the American Selling Price system. Despite the agreement of the U.S. negotiators to repeal the provision, the provision remained U.S. law.

Furthermore, Congress acted affirmatively to alter the terms of U.S. adherence to the antidumping code. In the first session of the 90th Congress in 1967, a resolution was offered in the Senate demanding that the international antidumping code be submitted to the Senate for its advice and consent. Later, in September 1968, the Senate passed an amendment that would have terminated U.S. adherence to the terms of the agreement. The House refused, however, to go along with the Senate action but agreed to a compromise, which provided for implementation only insofar as the provisions of the code were consistent with those of existing U.S. law and practice. Any conflict between the two was to be resolved in favor of the law as it had been administered previously. In effect, Congress took steps to nullify the antidumping code insofar as it differed from U.S. law.

The entire episode poisoned executive-legislative relations in the field of international trade. Senator Russell B. Long (D-La.), the chairman of the Senate Committee on Finance, published a law review article entitled "United States Law and the International Antidumping Code" in which he concluded:

The international antidumping code was negotiated without advance authority by Congress, in the face of a strict admonition by the Senate not to change the antidumping act in any way. Apart from the question as to whether the President has authority to enter into international agreements with foreign nations in an area which the Constitution reserves exclusively to the Congress, it is settled law that when an agreement has the effect of changing existing domestic law, either directly or by indirection through giving the law a meaning and a result which Congress never intended, the agreement cannot be given effect until it has been submitted to Congress for implementing legislation.¹

The Nixon administration entered office in January 1969 without tariff-cutting authority (the five-year authority granted by Congress in the Trade Expansion Act of 1962 had expired at the end of 1967). Moreover, both inside and outside of government it was thought to be imperative that nontariff barriers had to be subjected to the discipline of international rules. But there seemed little prospect, however, for obtaining the special authority required from a distrustful Congress, and, indeed, an attempt at trade legislation failed in 1971.

In July 1971, the Williams Commission, a commission on international trade and investment policy, reported "a growing concern in this country that the United States has not received full value for the tariff concessions made over the years because foreign countries have found other ways, besides tariffs, of impeding our access to their markets."² Slowly, a consensus began to evolve within the U.S. government that a new round of trade negotiations should be held. President Richard Nixon bluntly brought the issue to the forefront internationally and to the attention of U.S. trading partners with his actions of August 15, 1971—most particularly the closing of the gold window and the imposition of a surcharge on imports. These developments led to the Tokyo Declaration of September 1973, which called for a new international round of trade negotiations, to be known as the Tokyo Round, under the auspices of GATT. These multilateral negotiations would be aimed not only at further tariff reductions but also at nontariff barriers.

Although it was widely agreed that a new and ambitious round of negotiations on nontariff barriers to trade should be held, the problem of U.S. negotiating authority remained, with the executive branch needing to secure explicit and credible authority from Congress to engage in international negotiations on such practices. Work began within the executive branch on the design of a trade bill. The legislation that finally emerged contained a number of major executive branch initiatives, including a proposal to grant most-favored-nation (MFN) status to the Soviet Union. In many ways, however, the most significant provision of the 1973 Nixon trade bill was in the important and difficult area of nontariff barriers. In addition to seeking advance tariff-cutting authority, the executive branch sought a negotiating mandate on nontariff barriers and advance presidential authority to implement them in U.S. law, unless either the House or the Senate voted to override the president's proposal within a period of 90 days after notification—a one-House veto.

This unprecedented delegation of congressional authority to the president was approved by the House of Representatives and sent to the Senate in essentially the form it had been submitted to Congress by the executive branch. In the Senate, however, the administration's proposal predictably ran into strong opposition. Still angry about the Kennedy Round experience and believing that U.S. negotiators had turned deaf ears to congressional admonitions and private sector advice regarding the negotiations, key members of the Senate Finance Committee balked when briefed by committee staff on the provisions of the House bill.

During the 20 months of congressional consideration following submission of the trade bill much had occurred. In October 1973 the Organization of Petroleum Exporting Countries (OPEC) oil embargo darkened the world and, shortly thereafter, had plunged the world economy into a deep recession. In addition, President Nixon had resigned from office. His successor, President Gerald R. Ford, had renewed the previous administration's request for enactment of trade legislation, partly in an effort to head off spreading global protectionism. The legislation was being considered in the Senate in an entirely different political climate. Not surprisingly, given the passage of time and changed circumstances, the bill underwent major revision in the Senate Finance Committee.

In the judgment of the Finance Committee staff, the House bill proposed "the largest delegation of trade negotiating authority to the executive in history." In the view of Senator Herman Talmadge (D-Ga.), the House bill, with its legislative veto procedure, would establish procedures that were inconsistent with the traditional roles of the executive branch and Congress. "That's not the way our laws are made," Talmadge told Finance Committee staff persons. Instead he pr...

Table of contents

• Cover
• Half Title
• About the Book and Editors
• Title
• Copyright
• Contents
• Foreword
• Acknowledgments
• Introduction
• 1 The System CAN Work: The Trade Act of 1979
• 2 Congress and the Legislative Veto: Choices Since the Chadha Decision
• 3 The Many Faces of Congressional Budgeting
• 4 The War Powers Resolution: A Continuing Constitutional Struggle
• 5 Congress: Defense and the Foreign Policy Process
• 6 Foreign Policy Making on the Hill
• 7 Interest Groups and Lobbying
• 8 Steering Committee Report: Policy Paper on Legislative-Executive Reform
• Bibliography
• About the Editors
• About the Steering Committee Members
• Index